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Lessons from Europe for the private rented sector

As home ownership continues to decline, Shelter's Roger Harding says there are solutions close to home for managing a large private rental market.

 

Home ownership is in decline and the chances of getting a social home are getting slimmer all the time. If recent trends continue, by the end of this decade the private rented sector will be home to more than 20% of all UK households.

 

"Generation rent" is getting bigger and is here to stay, yet the squeeze on private renters' finances is getting tighter, with little prospect of easing its grip in the near future. What used to be the cheap alternative to getting on the property ladder is now becoming out of reach for more and more people; average rents in 55% of local authorities are now unaffordable.

 

Many younger people have inherited from their parents a fixed timeline for their adult lives. They meet someone, get married, find a settled home, have children. Thanks to our housing crisis, that settled home is now a distant dream for many. Our research shows that 21% of people aged between 18 and 44 admit to delaying having children because of the lack of affordable housing available to them. This figure rises to 31% for those renting in the private sector.

 

Many families, from the very vulnerable to the "squeezed middle", have no option but to opt long term for the unstable private rented sector. So we face a simple choice: tell today's young people to hold on until long-term policies kick in, or give them practical solutions now.

 

The latter has to start with security. Knowing a place is yours for the next few years is the mark of a home, and the foundation for a stable family. Planning minister Greg Clark summed this up when making the case for more homes: "It's destroying family life in so many ways. How can a family put down roots if they're on six months' notice to quit on a buy-to-let?" he asked. In fact, most private renters receive only two months' warning.

 

Renting in Europe is far from perfect, but it does provide us with a few options to contemplate. In France and Spain tenancies typically run for three to six years, starting at market rents and then only increasing in line with inflation. This should be enough for many landlords to cover rising costs, particularly when interest rates follow inflation.

 

In Ireland, the longer you've been in a property, the more notice a landlord has to give you if they want the place back. In Germany, because of longer tenancies, tenants are allowed to decorate as they wish as long as they change it back when they leave. We're not talking about rent caps here, just a sensible needed discussion about giving families more stability.

 

There will be claims that landlords will flee the sector in response and this is a balance that will need to be struck. But for many this will provide longer certainty of rent and there could be some quid pro quo tenants might be expected to take on a bit more maintenance in exchange for a longer stay.

 

Technically such tenancies are possible now, but which landlord would go out of their way to offer this when demand is so high and rents are rising so quickly, even when mortgage costs are so low? The government will need to take a lead.

 

For some the private sector provides a welcome flexibility, and we shouldn't lose this. But for many others it's the only option they have, and we need to consider what will make it feel like a real home. This has to be central to the government's new housing strategy if it is to reflect the reality of life for many families.

 

Long term, we need to build more homes. But until the long term arrives, it's time to consider practical solutions to help generation rent settle down.

 

Roger Harding is head of policy, research and public affairs at Shelter

 

www.guardian.co.uk

 

 

 

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